ERISA at the Supreme Court: How Will Amy Coney Barrett’s Confirmation Shape the Legacy Left By Justice Ginsburg’s Seminal ERISA Opinions?

Amy Coney Barrett was recently confirmed to replace Ruth Bader Ginsburg on the U.S. Supreme Court. Justice Ginsburg is remembered as a champion of civil rights and gender justice. But Ginsburg is also responsible for some of the Court’s most important ERISA decisions. This invites us to look back on some of Justice Ginsburg’s most important ERISA decisions and speculate about how Justice Barrett might decide future ERISA cases.

Justice Ginsburg wrote the seminal opinion in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003), the decision that set the standard for how ERISA Plans and ERISA-governed insurance companies must weigh the opinions of the claimant’s treating doctors. Nord rejected the rule that ERISA plans must defer to the claimant’s doctor’s opinions about the claimant’s medical condition in a disability insurance claim. But Ginsburg emphasized, and the other justices agreed, that ERISA Plans must give fair weight to claimants’ doctors’ opinions. Her opinions emphasizes: “Plan administrators, of course, may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.” Nord protects ERISA claimants’ right to rely on their treating doctors in claiming benefits–a right that is particularly critical since claimants can rarely afford to hire a consulting physician for the purposes of an insurance claim.

A more technical but still important decision by Justice Ginsburg was UNUM Life Insurance v. Ward, 526 U.S. 358 (1999). Ward concerns the extent to which ERISA preempts (i.e., overrules) state laws that regulate insurance policies. Justice Ginsburg wrote the Court’s unanimous opinion finding that ERISA does not stop states from regulating insurance policies that are issued under employee benefit plans. This means that important state-law consumer protections for insurance policies still apply when the insurance policy is sponsored by an employer.

Justice Ginsburg also wrote the opinion in Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 541 U.S. 1 (2004) which confirmed ERISA can apply to a small business owner who participates in their own company’s benefit plan. Many small business owners are familiar with the frustrations of falling into a grey area where they lack the protections of status as an employee but also lack the advantages of being a large business. For ERISA benefits at least, this “worst of both worlds” scenario is less of a concern. The Yates decision held that the owner of a small business can participate in the business’ ERISA plan and thereby obtain the protections and favorable tax treatment that ERISA affords to plan participants.

These decisions reflect a legacy of implementing Congress’ intention in enacting ERISA of providing real protections to people who earn insurance and other benefits through their employment.

Justice Barrett’s record suggests she is likely to continue that legacy. Justice Barrett decided one important ERISA case during her tenure on the Seventh Circuit Court of Appeals (the federal court that hears appeals from Illinois and other midwestern states). In Fessenden v. Reliance Standard Life Ins. Co., 927 F.3d 998, 999 (7th Cir. 2019), then-Circuit Judge Barrett determined that ERISA plans, and ERISA-governed insurance companies, must strictly comply with ERISA’s rules requiring full, fair, and prompt review of insurance claims.

In that case, Donald Fessenden made a claim for disability insurance benefits through an insurance policy issued by Reliance through his employer’s benefit plan. Reliance denied his claim and Fessenden appealed the denial using the Plan’s internal administrative procedures. Reliance failed to decide the appeal within the deadline imposed by ERISA. That violation of ERISA had consequences that made it easier for Fessenden to pursue his benefits claim.

Reliance asked the Seventh Circuit to let it off the hook. Reliance argued its violation was “relatively minor” and the court should excuse the violation “because it was only a little bit late.” It characterized the ERISA deadline as a “technical rule.”

Then-Circuit Judge Barrett declined. Her ruling emphasized that ERISA deadlines matter to plan participants:

After all, the administrator’s interests are not the only ones at stake; delaying payment of a claim imposes financial pressure on the claimant. That pressure is particularly acute for a disability claimant, who applies for disability benefits because she is unable to work and therefore unable to generate income. Given the seriousness of that burden, the new regulations single out disability claims for quicker review than other kinds of claims.

Her decision also emphasizes that courts have repeatedly required strict compliance with deadlines by claimants, often at the urging of insurance companies. In requiring the same level of exactitude by ERISA plans and insurers, she observed: “What’s good for the goose is good for the gander.”

ERISA Claim Deadlines Extended Due to COVID-19

ERISA-governed insurance claims are subject to specific deadlines that claimants have to meet in order to protect their rights. Normally, the consequences of missing a deadline are draconian. For instance, appealing an ERISA claim denial even one day late can irrevocably waive the right to dispute the denial, no matter the reason for the delay.

The good news is that these deadlines have been relaxed in light of the COVID-19 pandemic. The Department of Labor, the federal agency responsible for overseeing ERISA-governed employee benefit plans, has issued an order extending certain ERISA claim deadlines due to the COVID-19 pandemic. This order comes pursuant to authority granted by Congress in the Coronavirus Aid, Relief, and Economic Security Act (a/k/a the “CARES” Act).

DOL is extending these deadlines so that plan participants, beneficiaries, and employers have additional time to make critical coverage and other benefit decisions during the pandemic. The upshot is:

  • Disability insurance claimants have additional time to submit claims and appeal denied claims. These deadlines do not run during the period from March 1, 2020, until 60 days after the federal government announces the end of the current COVID-19 national emergency. That means an appeal that would normally be due next week might not be due until 60 days after the federal government announces the end of the national pandemic emergency.
  • Group health plans have additional time to comply with COBRA continuation coverage deadlines. This is critical for employees recently laid off and looking for answers about continued health insurance coverage.
  • Group health plans also have extra time to determine benefit claims; and
  • ERISA plans have extra time to provide disclosures and notices required by ERISA, provided the plan acts in good faith and furnishes the disclosure or notice as soon as practicable under the circumstances, including through electronic means.

The Department of Labor has FAQs for ERISA claimants and participants regarding the deadline extensions.

These extensions will help employees and plan participants effectively safeguard their rights during the pandemic.

Ninth Circuit Emphasizes Importance of ERISA Claims-Handling Regulation in Reversing LTD Benefit Denial

ERISA-governed disability benefit claims are subject to the Department of Labor’s regulation requiring full and fair investigation of claims. The regulation includes rules requiring claims administrators apply plan provisions correctly and thoroughly investigate claims. A claims administrator’s failure to adhere to the rules expressed in the regulation can be the difference-maker if the benefit dispute proceeds to litigation. A recent unpublished Ninth Circuit Court of Appeals decision, Alves v. Hewlett-Packard Comprehensive Welfare Benefits Plan, emphasizes this.

Alves applied for short-term disability and long-term disability under his employee benefit plan. The plan’s claims administrator, Sedgwick, determined Alves’ condition did not render him disabled, i.e., that Alves could still perform his job duties. On that basis, Sedgwick denied both the short- and long-term disability claims. The federal district court agreed with Sedgwick.

The Ninth Circuit Court of Appeals reversed the district court. The Ninth Circuit agreed that Sedgwick’s decision Alves didn’t qualify for short-term disability benefits was adequately supported by Alves’ medical information. But the court found Sedgwick incorrectly evaluated Alves’ long-term disability claim. Sedgwick denied Alves’ long-term disability claim because Sedgwick concluded Alves failed to meet the plan’s one-week waiting period. The court concluded Alves’ clearly met this requirement. Accordingly, the court remanded Alves’ long-term disability claim to Sedgwick for further investigation. The Ninth Circuit admonished Sedgwick to follow ERISA’s rules requiring full and fair investigation of claims in reviewing Alves’ long-term disability clam on remand.

The Ninth Circuit’s opinion is unpublished, meaning it is only persuasive precedent. Lower courts may follow this decision if they find it persuasive, but they are not required to.

The Alves decision is an important reminder that ERISA claims administrators can be held accountable for failing to correctly apply plan provisions and failing to investigate claims in compliance with ERISA’s implementing regulation.